Helping First Nations, Inuit and Metis with Tax Filing

The Canada Revenue Agency is trying to reach out to Canada’s First Nations, Inuit and Metis to encourage them to file their tax forms on time and could use your help to make sure these communities get all the tax benefits they are entitled to. But filing tax returns are not always easy, especially when there is income on and off the reserve.

Citing the deepening European crisis, the Bank of Canada yesterday said it is maintaining its target for the overnight rate at 1%. The Bank Rate likewise stays at 1.25% and the deposit rate at 75 basis points. Canada's central bank is expecting the European recession to be more pronounced than it earlier expected. And although U.S. growth has been stronger than anticipated, "household deleveraging, fiscal consolidation and negative spillover effects from the European crisis are all expected to weigh on U.S. growth.î Canada, too, has enjoyed stronger growth in the second half of 2011 than forecast in October. The Bank notes solid growth in household expenditures and business investment. But it expects that in Canada, too, growth will be curtailed by the fiscal and financial issues afflicting Canada's global trading partners. "The economyalso continues to face competitiveness challenges, including the persistent strength of the Canadian dollar,î it says. At the present time, the Bank of Canada does not see inflation as an issue. Although slightly higher than projected, inflation is expected to decline as a result of reduced pressures from food and energy prices and ongoing excess supply in the economy. Additional Edcuational Resources: Debt and Cash Flow Management  

Changes to the Canada Pension Plan scheduled for January 1, 2012 may come as a surprise for some semi-retired Canadians. Up until now, once you began receiving your CPP retirement pension, you were no longer required (or allowed) to contribute to the CPP. As of January 1, that's changing. By default, all employees (and self-employed taxpayers) who earn CPP contributory earning will be required to contribute to CPP even if they are already collecting a CPP retirement pension. For employees over age 65, there's a way to opt out, but the deadline for opting out is December 31, 2011. If you don't file Form CPT30 with your employer by the deadline you'll be paying CPP contributions on your earnings as on January 1. For employees who are under age 65, the nasty surprise is you have to start contributing to CPP again on January 1, even if you're already collecting a retirement pension.  Employees who are over 70 continue to be exempt.  For employees ages 65 to 69, beginning January 1, 2012, payroll departments are required to withhold CPP contributions unless they have a completed Form CPT30 Election to stop contributing to the Canada Pension Plan, or revocation of a prior election on file.  The election will apply to the first month following the receipt of the completed form by the employer.  So, if you don't want to pay CPP in January, you must file the form by December 31. For self-employed taxpayers, the requirement is not so urgent.  For self-employed taxpayers between age 65 and 69 to opt out of the additional CPP contributions, all that is required is to indicate on Schedule 8 for 2012 (filed with their 2012 tax return) which month they want to cease contributing. The good news for those who continue to contribute after they begin receiving their CPP retirement pension is that they are contributing to a post-retirement pension which could earn them an increased CPP pension of up to $25 per month for each year they contribute while receiving the retirement benefits.   Additional Educational Resources: Advanced Payroll for Professional Bookkeepers  

Canada Revenue Agency has released the 2011 version of the Business and Professional Income guide, which provides guidelines on reporting business or professional income for 2011. The guide updates three areas that affect the filing of returns for the self-employed for 2011. Filing Requirement for Partnerships Beginning in 2011, partnerships with less than six partners are no longer exempt from filing a T5013 Partnership Information Return.Instead, the requirement for filing the T5013 is based on the financial activities and nature of the partnership. This means that some smaller partnerships that have assets in excess of $5 million or have transactions (revenue plus expenses) in excess of $2 million will now be required to file returns.Likewise, all partnerships that have a partner that is another partnership, a corporation or a trust will be required to file a T5013. On the other hand, larger partnerships that do not meet these requirements but were required to file a T5013 in prior years may now be exempt from filing the form. Temporary Hiring Credit for Small Business Small businesses whose 2010 Employment Insurance premiums were $10,000 or less may be eligible for a credit up to the maximum of $1,000 against their increase in EI premiums for 2011 over those paid in 2010. Manufacturing and Processing ó Accelerated CCA The class 29 (straight line, 50% rate)inclusion of manufacturing and processing equipment has been extended to include eligible machinery that becomes available for use in 2012 and 2013. Such equipment would normally be included in class 43 (30% rate, declining balance).

Citing dire consequences without quick action, Finance Minister Flaherty warned this week that the debt to-GDP-ratio in many European countries is unsustainably high. Speaking to a business audience in Toronto this week, Mr. Flaherty said governments should practice what they preach to their own citizens: live within your means and save for a rainy day.The European debt problem "threatens not only Europe itself, but all countries,î said the Finance Minister. While several nations have received bailouts from the IMF and other bodies, the impact on the global economy is increasing as a result of larger economies moving to the centre of the crisis.This topic and its remedies are discussed in Financial Recovery in a Fragile World which explains world events and how Canadians can work within a Real Wealth Management framework to get their own financial house in order and build wealth despite volatile world financial events. The Knowledge Bureau's new Debt and Cash Flow Management Course will also assist financial advisors to become certified in helping Canadians with debt and cash flow management. Both the book and course will be available for distribution December 15. Knowledge Bureau Report Readers can pre-order today and save shipping and handling costs. 

Despite volatile times, Canadian workers were better off during the last economic recession than during the two recessions in the 1980's and 1990's. This news comes from an article released by Statistics Canada on September 20, 2011, which outlined the factors involved. Information was derived from the study "Workers Laid-off During the Last Three Recessions: Who Were They, and How Did They Fare?" In the early 1980s, 2.9% of workers were laid off either temporarily or permanently. In the 1990s, 2.7% of workers were laid off, while only 2.0% of employees were laid off between October 2008 and December 2010. Workers also fared better due to the fact that the last recession was also much shorter in duration than previous recessions. In terms of employment, it took 27 months to return to its pre-downturn level, while it took 40 months during the early 1980s and 53 months during the early 1990s. Education planning pays off in recessionary times. Common characteristics were found between workers who were more likely to be laid off. These workers were typically between 15 and 24 years of age, held no university degree, had less than two years of seniority, or were employed in the goods sector. Holding a university degree seemed to improve workers chances of finding a job in the short term. Seniority also played a factor, as well as initial expectations to be recalled. While many Canadian workers are still feeling the effects of the recession, conditions are slowly starting to improve.  Unemployment levels in 2011 continue to decrease overall, with minor fluctuations over time. The unemployment rate in Canada was last reported at 7.5 percent in November of 2011.   Additional Education Resource: Financial Recovery in a Fragile World book.  

The federal government has announced increases to federal tax brackets, non-refundable and refundable credits based on an indexing increase of 2.8% for 2012. This brings the Basic Personal Amount, Spousal Amount and Amount for Eligible Child up to $10,822. The latter two amounts will be further increased to $12,822 under the new Family Caregiver Tax Credit. The indexing adjustment also raises the top tax bracket up to $132,406; this is the amount of taxable income that will be subject to the top federal tax rate of 29%. Planning for tax free zones, income ceilings for income-tested programs andinter-family use of transferrable tax creditswill be the subject of the January T1 Tax Update. For more information see Distinguished Advisor Workshop